Introduction to fee handling
CoinTracker’s upgraded accounting engine allows users to more accurately account for fees paid on exchanges or blockchains for crypto transactions. Fees can affect both your cost basis and proceeds, and therefore the ultimate gain or loss calculations.
(Remember, capital gains/loss = proceeds - cost basis)
In general, fees are seen as 'disposals' of an asset and are taxable events. This means they can generate a gain or loss, and CoinTracker will include these in your tax calculations.
Example 1: You transfer 1 ETH and pay a 0.1 ETH gas fee.
The cost basis of 0.1 ETH is $10. The market value of 0.1 ETH at the time of spending for gas is $30.
- Cost basis of 1 ETH before transfer is $1,000
- Gain on 0.1 ETH disposal on gas fees $20 ($30 - $10)
- The new cost basis 1 ETH after transfer $1,030 ($1,000 + $30)
Example 2: You sell 1 ETH for $1,000 and pay a $30 gas fee
- The proceeds on the sale of 1 ETH will be $970 ($1,000 - $30)
Example 3: You buy 1 ETH for $1000 and pay a 0.2 ETH gas fee from an existing ETH lot you had.
The cost basis of 0.2 ETH is $10. The market value of 0.2 ETH at the time of spending for gas is $60.
- Cost basis of 1 ETH is $1,000
- Gain on 0.2 ETH disposal on gas fees $50 ($60 - $10)
- The total cost basis of 1 ETH is $1,060 ($1,000 + $60)
CoinTracker also encourages all users to consult with independent financial advisors with any questions.
Examples in CoinTracker
Below are some examples of how fees are handled by default in CoinTracker with the updated accounting engine:
When the fee is the same currency as the outgoing asset, the total amount disposed is equal to the Outgoing amount + the Fee amount
In this example, the total USDC disposed is: Outgoing amount (100) + Fee (1) = 101 USDC
When the fee is the same currency as the incoming asset, the total amount received is equal to the Incoming amount - the Fee amount.
In this example, the total BTC received is: Incoming amount (1) - fee (0.001) = 0.999 BTC received
(the balance of BTC in that wallet will be increased by .999 BTC)
When the fee is not the same currency as the outgoing or incoming asset (think of exchanges that use their own tokens for fees, like BNB on Binance), the fee is simply a disposal independent from the outgoing or incoming assets (similar to a "send" or "sell" transaction)
In this example, the total BTC disposed is: 1 BTC. The total USD received is: 1,700 USD, and the total BNB disposed is: 0.002 BNB
Why don't I see a fee on my BTC transactions?
For some BTC transactions, many transfers can be bundled into a single transaction. In these cases it is not always possible for CoinTracker to tell how much of the fee each individual wallet paid.
In these cases, the fee is automatically deducted from the amount received (and it won't be in the "fee" column.)
Disclaimer: This post is informational only and is not meant as tax advice. For tax advice please speak with a tax professional. See our full disclaimer by clicking here.